SC Asks RBI to Respond to Moneylife Foundation Regarding Banks not Passing on the Benefits of Lower Interest Rates

The Supreme Court directed RBI to communicate its decision on the representation over banks delaying passing on the benefit of lower interest rates to those who have taken loans at floating interest rates. A bench of Chief Justice Ranjan Gogoi and Justices S K Kaul and K M Joseph asked RBI to communicate within six weeks its decision to public trust 'Moneylife Foundation' which has filed the representation alleging that banks and FIs take a tardy approach in lowering interest rates despite the central bank's decision on the repo and reverse repo rates.

The Reserve Bank of India undertakes bi-monthly monetary policy review and sets the repo rate -- at which it lends money to the banking/financial system, setting the tone for the interest rate regime which impacts, among others, EMI for home and auto loans. Reverse repo is the rate at which it borrows money from banks.

The PIL has challenged the manner of implementation of the Reserve Bank of India (Interest Rate on Advances) Master Directions 2016 by banking companies in the country.